Employing an endogenous growth model with human capital, this paper explores how productivity shocks in the goods and human capital producing sectors contribute to explaining aggregate fluctuations in output, consumption, investment and hours. Given the importance of accounting for both the...

In this paper we estimate industry-level VAR models at the 4- digit SIC level for a number of US manufacturing sectors, using TFP series which allow for variable factor utilisation over the cycle. This allows us to verify the relevance of alternative theoretical modelling approaches to the...

In this paper we study the link between elections, fiscal policy and economic growth/fluctuations. The set-up is a dynamic stochastic general equilibrium model of growth and endogenously chosen fiscal policy, in which two political parties can alternate in power. The party in office chooses...

This paper develops a dynamic stochastic general equilibrium model to examine the quantitative macroeconomic implications of countercyclical fiscal policy for France, Germany and the UK. The model incorporates real wage rigidity which is the particular market failure justifying policy...

Recently, Baxter and King (1995) developed a bandpass filter which overcomes to some extent the well known drawbacks of the Hodrick-Prescott filter. In this paper, the circumstances under which the Baxter-King filter is preferable are identified, and a modification is presented which takes into...

The aim of this paper is to test formally the classical business cycle hypothesis, using data from industrialized countries for the time period since 1960. The hypoth- esis is characterized by the view that the cyclical structure in GDP is concentrated in the investment series: mixed investment...

Using a two-sector endogenous growth model, this paper explores how productivity shocks in the goods and human capital producing sectors contribute to explaining aggregate cycles in output, consump- tion, investment and hours. To contextualize our findings, we also assess whether the human...

This paper contributes to the on-going empirical debate regarding the role of the RBC model and in particular of technology shocks in explaining aggregate fluctuations. To this end we estimate the model’s posterior density using Markov-Chain Monte-Carlo (MCMC) methods. Within this framework we...

In the time domain, the observed cyclical behavior of the real wage hides a range of economic in infuences that give rise to cycles of differing lengths and amplitudes. This may serve to produce a distorted picture of wage cyclicality. Here, we employ frequency domain methods that allow us...

In this paper we present several new measures of gross-output-based total factor (multifactor) productivity (TFP) at the sectoral level for manufacturing industries in the G7 economies. We calculate measures of both total factor productivity growth and comparative productivity levels. These are...